Naira Appreciates to 6-Week High on Oil Dollars: Lagos Mover

Nigeria’s naira rallied to its strongest level in more than six weeks against the dollar after oil companies in Africa’s biggest crude producer sold the U.S. currency, boosting supply.

The naira appreciated a second day, gaining 0.6 percent to 159.65 per dollar at 2:14 p.m. in Lagos, the commercial capital, the highest on a closing basis since June 24. The move was the biggest gain today among 24 African currencies tracked by Bloomberg.

“A combination of foreign-exchange sales from oil companies and corporate dollar supply supported the currency,” Samir Gadio, a London-based emerging-markets strategist at Standard Bank Group Ltd., said in an e-mail. “Additionally, the market expects state-owned oil company foreign-exchange flows to hit the system in the short term.”

Oil companies, which sell the U.S. currency mainly at the month’s end to meet domestic expenses, are the second-biggest supplier of dollars after the Central Bank of Nigeria. The Abuja-based institution auctions foreign exchange on Mondays and Wednesdays. It sold $598 million this week, little changed from $600 million in the previous five days.

The bank’s Monetary Policy Committee left its benchmark interest rate at a record 12 percent for an 11th consecutive meeting on July 23 to protect the currency of Africa’s second-biggest economy. It introduced a 50 percent cash reserve requirement on public-sector funds after warning about the risk of excess liquidity.

Yields on Nigeria’s $500 million Eurobonds due January 2021 fell 2 basis points, or 0.02 percentage point, to 5.5 percent. Borrowing costs on local-currency debt due January 2022 rose 7 basis points to 13.75 percent yesterday, according to data compiled by Bloomberg.

Ghana’s cedi was unchanged at 2.0650 per dollar in the capital, Accra.